Last week saw initial jobless claims come in at a new pandemic low of 709K which was closing the gap on the pre-pandemic record of 695K from October of 1982. Not only was that reading revised higher by 2K to 711K, but this week’s print rose to 742K missing expectations of a further decline down to 705K. That is the first time that claims have risen week over week since the week of October 9th.  Granted, this week’s increase is not that significant as it is only at the highest level since two weeks ago (10/30), and it is still 15K below that week’s revised reading of 757K.

On a non-seasonally adjusted basis, claims were likewise higher rising from 725K to 743K.  That brings it right back to almost exactly where things stood two weeks ago.

The inclusion of Pandemic Unemployment Assistance (PUA) claims helps to give a more complete picture. With the inclusion of this additional program, the overall outlook is pretty similar to just regular state claims.  PUA claims likewise rose this week up to 320.2K from 296.4K last week; the highest level since only two weeks ago.  Again, while that is not an improvement with total claims between PUA and regular state programs rising to 1.064 million from 1.021 million, claims have not made that significant of a move higher and that is at a time of year with some seasonal headwinds.

Continuing jobless claims are lagged an additional week to the initial claims data. Given this, last week’s drop to a new low for initial claims means continuing claims fell this week.  Seasonally adjusted continuing claims fell to 6.372 million this week from 6.8 million the previous week. Although lower, that was not as good as forecasts were calling for as claims were expected to fall to 6.35 million. This week marked the second week in a row below 7 million for the first time since March.  Not only was this a low for the pandemic, but that also finally brings claims back below the pre-pandemic record high of 6.635 million from May of 2009.  So while claims are still at historically elevated levels and have a long way further to go, they are no longer as extreme as earlier this year and are at least to a degree back within a range with some historical precedence.

The data for all continuing claims programs like those for extended benefits and federal employees are lagged yet an additional week meaning the most recent print covers the final week of October. As shown below, through the end of October the two largest programs (regular state and PUA claims) have both continued to fall, but that is partially due to the expiration of benefits.  Other programs covering extensions to benefits like Pandemic Emergency Unemployment Compensation (PEUC) and the Extended Benefits program have both continued to see claims rise with the most recent week marking new highs for the pandemic.  Additionally, these programs make up for larger and larger shares of total claims.  In other words, broadly claims continue to improve but a growing share of existing claims have been unemployed for long periods of time.  Click here to view Bespoke’s premium membership options for our best research available.

As we noted in last Thursday’s Chart of the Day, sentiment as measured by the American Association of Individual Investors’ (AAII) weekly survey absolutely blew the doors off.  More than half of respondents reported bullish sentiment—the highest bullish sentiment reading since January 2018—with the week over week increase the largest in over a decade.  Turning to this week, bullish sentiment remains at the high end of the past several years’ range, but there was a significant moderation as only 44.35% report as bullish.  That 11.5 percentage point turnaround was the largest drop in bullish sentiment since January 30th. In the history of the survey going back to the late 1980s, there have been 74 other weeks in which bullish sentiment has dropped at least 10 percentage points from a reading above 50%.

Compared to that double-digit move, bearish sentiment only rose 1.49 percentage points. That is, those that are no longer reporting as bullish did not necessarily turn around to take a pessimistic view this week.  Currently, just over a quarter of respondents reported as bearish which is still muted relative to the past year’s readings and is still below the survey’s historical average of 30.63%.

Given bullish sentiment fell double digits and bearish sentiment saw a comparatively tiny move, investors appeared to be less polarized this week as neutral sentiment made up the difference rising exactly 10 percentage points.  Staying true to round numbers, this was only the 100th time in the history of the survey that neutral sentiment rose double digits in a single week.  After last week’s historically low reading of 19.29% (in the bottom 7.5% of all readings), neutral sentiment is now back up to 29.29% which is within a couple of percentage points of the historical average.

While that combination of higher neutral sentiment reading plus lower bullish sentiment points to things being less polarized than they were last week, sentiment still does not largely favor the bulls.  As shown below, the bull-bear spread is now at 17.99 which remains at the high end of the past few years’ readings. Click here to view Bespoke’s premium membership options for our best research available.

Since bottoming on the last trading day of November, the S&P 500 (SPY) has had a banner month so far this November rising 10.61% month to date.  While there is still nearly two weeks left in the month, SPY is on pace for its best month since April.  That is also in the top 1% of monthly moves of the past two decades. Other than April, the only month of the past 20 years that has seen a larger gain was October of 2011.

Looking across the various country ETFs in our Global Macro Dashboard, there similarly have been some massive moves so far this month. Several of these have risen over 20% and only two, India (INDA) and China (MSHI), have risen by single-digit percentages. Spain (EWP), Italy (EWI), France (EWQ), Mexico (EWW), Norway (ENOR), and the UK (EWU) are all on pace for their best month of the past twenty years. Every other country ETF is also seeing monthly moves in the top decile of their respective 20-year ranges. For some of these, like Singapore (EWS) or Switzerland (EWL), this month has been the best month in over a decade.Click here to view Bespoke’s premium membership options for our best research available.

With Tesla (TSLA) set to be the next stock to join the S&P 500 in a little over a month, it will be the 20th change to the index (addition or removal of a stock) of 2020.   That is basically in line with the average number of changes per year over the past decade (20.7).  Of the current members of the S&P 500, 191 have entered the index since the start of 2010.

Below we show a chart from last night’s Closer depicting the performance of the stocks that have entered the S&P 500 in the past decade beginning three months before their entrance date (day number zero is the first day as an S&P 500 member) to three months after.  As shown, historically over the past decade, new entrants to the large-cap benchmark have on average risen in the months leading up to inclusion.  In the immediate days following inclusion, there is some sideways to slight downward movement but that is followed by a turn higher.

In the chart below we show the performance of just the stocks that have been included in the index since the start of 2020 from the close before the first day they trade as an S&P 500 stock through three months out.  While it has not been a full three months since some of these have been added (i.e. Teradyne (TER), Catalent (CTLT), Etsy (ETSY), Pool Corp (POOL), and Vontier (VNT)), the average performance three months after inclusion has been a gain of 11.5%.  Carrier Global (CARR), which was spun off of United Technologies (UTX) in the spring, experienced the largest move higher following its inclusion with a rally of 82.3%.  TER is on pace for the second-largest gain having risen 39.04% since joining back in September. On the other hand, Paycom (PAYC) fell 24.27% after joining the S&P; the worst of any of these stocks.

Paycom’s decline in the three months following its inclusion was largely a function of very poor timing though.  The stock was added to the index in late January, meaning that 3 month period essentially covered the whole of the COVID Crash in February and March.  Since its inclusion, though, it has rallied 21.2%.   That is roughly 1.5 percentage points lower than the median performance to date of all 2020 additions since being added to the index.  Dexcom (DXCM) and the newest addition Vontier (VNT) are the only stocks to currently sit below their levels from prior to addition.

As for what this means for Tesla (TSLA) in the months to come, recent history has shown new additions to the index have been treated well by investors, but TSLA has one major distinguishing feature: its size.  As shown below, TSLA’s current market cap is $418.6 billion. By comparison of other additions in 2020, on the respective date it was added to the index, DexCom (DXCM) was the largest with a $37.94 billion market cap. That is 11 times smaller than TSLA today.  By that same rate, the largest stock in terms of current market cap is Carrier (CARR) at $34.98 billion. With respect to CARR, TSLA is 12 times its size even after CARR’s stock price has tripled since being included into the S&P!  Click here to view Bespoke’s premium membership options for our best research available.